online groceries

Amazon Stumbles In Online Groceries As Other Stores Gain

It’s been 16 months since Amazon acquired Whole Foods Market with the promise of expanding online grocery offerings, but new research shows it’s losing ground. Increasingly, consumers — who are more willing to do at least some of their food shopping online — are turning to the home-delivery options of brick-and-mortar stores rather than Amazon.

A new report from UBS, as reported by Bloomberg, finds that the number of Prime members (estimated at about 50% of the U.S.) who bought groceries online at least monthly fell to 12% in 2018, down from 17% in 2017.

That decline comes even as Americans are enthusiastically buying groceries online, with those sales expected to increase by 15% next year, according to a new study from Brick Meets Click, a grocery advisory firm based in Barrington, Ill. That will boost online sales to 6.3% of America’s total grocery market, estimated to be $840 billion by the Food Marketing Institute.



But the fastest gains are coming not from Amazon Prime, which still takes two or three days to ship most of its food items, but the many brick-and-mortar retailers expanding their pickup and delivery options.

Those players, from giants like Walmart, Target and Kroger to regional and local chains, are likely to see their online sales jump between 25% and 30% in the coming year, says David Bishop, partner at Brick Meets Click.

“Consumers want more choice and more control, so stores that offer both pickup and delivery options give them more options,” he says. “And while Amazon has been available to consumers for years, those stores have much longer runways for growth.”

In 2017, just 69% of the U.S. had access to at least one other home delivery or pickup grocery service besides Amazon Prime. Now, with so many food stores diving in, 81% of households had access — a percentage expected to hit 90% during 2019.

Walmart, for example, which now offers delivery for 40% of U.S. households, expects that number to reach 60% next year, “and that’s not unrealistic,” Bishop tells Marketing Daily. The retailer is also up to 2,100 grocery pickup locations, and 700 pickup towers.

Earlier this year, Brick Meets Click research showed households spend almost three times more with a delivery or pickup service vs. Amazon on a monthly basis ($200 vs. $74 respectively).

Bishop says experience “continues to be the key battleground. We no longer think that getting something we order online delivered in two days is cool — that’s just vanilla. We now want orders in under an hour. Will we get ripe avocados? What will the quality of meat and perishables be?”

More and more retailers are pushing into novel experiences, but they’re also raising many questions. “Many are experimenting with driverless vehicles, which sounds great. But if I’m not home and there’s no driver, who’ll unload my groceries?”

He’s equally skeptical about Walmart testing a service that will allow associates to enter your home and put groceries away in your fridge if you’re not there. “Is that cool? Or creepy? I think consumers are likely to take a dystopian counterview.”

Next story loading loading..